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Steve Zito, MS Fin./BS Econ. Wharton School, HTML Writers Guild
uses economic and technical analysis to forecast the direction of the stock market. The views in this newsletter are opinions only, and should not be relied upon as advice for investment decisions.
Nasdaq Dec.25 Nasdaq Dec.18 INDEX **INTEL REVIEW** EMAIL

NASDAQ COMPOSITE
INDEX closed 2291.86

Five of 9 indicators are NEGATIVE
Tue., Jan. 2, 2001

******************Commentary*******************
Jan. 2 Nasdaq Composite is testing the 2550 level but as a resistance. I still expect Nasdaq to recover 28% this month to around 2950. After today's 179 point (7%) plunge, Nasdaq's 10-day chart stochastics are completely OVER-SOLD at 8.31/7.83% (were 99.56/80.02% Dec. 25). The short-term chart is forecasting a huge upward over-sold bounce. Stochastics on the 90-day chart confirm an imminent move to upside. Stochastics for the 2-year chart have indicated a long-term bottom in Nasdaq in place for several weeks. The 2-year is very OVER-SOLD, forecasting a January Nasdaq rally to 2950. Nasdaq has made eight 250 to 450 point rebounds in the past 3 months, none of which lasted more than 2 days. I have stated often that stocks could not advance until the Federal Reserve lowers interest rates. Every investment firm "guru" and "analyst" recommended buying Nasdaq when the Index was over 5,000, 4,000, and 3,000, and finally when Nasdaq collapsed last week, brokerage Robertson Stephens suddenly downgraded their favorite Internet stocks. Too late, Nasdaq has already hit the bottom! INTEL has nicely rising stochastics 65.63/60.39% (compared to falling 31.25/43.21% on Dec. 25 just before last week's 13% tax-loss sell-off). MSFT stochastics are turning around and rising to the upside nicely at 32.47/45.76% (compared to an over-bought 83.08/82.73% Dec. 25) and predict a very big move soon. Last year's plunge from $119 to $40 since Ballmer became head of Microsoft forced major cost reductions at a time when Windows 2000 revenues are building. Added MSFT to my Model Portfolio at $47, DELL at $18, WCOM again at $14. CISCO has an extreme P/E of 82.05, yet stochastics at 11.70/16.37% make this stock the most OVER-SOLD of the Nasdaq big-cap leaders despite a rich price (versus over-bought 88.97/82.07% Dec. 25). No brokerage advised you to sell CISCO at $84 back in Spring, yet last week, they issued negative reports at $38. ORACLE hit $32 four times in 3 weeks and failed to break through it each time. Stochastics are very OVER-SOLD at 18.31/9.72% (compared to 97.03/80.74 Dec. 25 just before the stock dropped 19% last week). ORCL has an unstable earnings flow, and investors want stability. The last quarterly earnings report is only enough to support $22 stock price. ORCL has major resistance at $32. WCOM stochastics approaching a bit over-bought at 89.47/86.19% (compared to 58.33/18.89% Dec. 25). Worldcom broke $14 resistance, and I had to re-enter it in Model Portfolio. With a 9.74 P/E, it's a buy. DELL is under $20 and with heavy volume in January $20 call options rising stochastics at 43.48/57.73% (compared to 80.77/73.70% Dec.25), this is the stock to hold for the long term. President Bush is meeting with Dell and other CEO's in Austin, TX on STEERING the economy.
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